Gap Analysis - the Key to effective SWOT

We will wrap up the SWOT Analysis today through a process I call Gap Analysis. While purists may dislike my use of the term, for the rest of you this should make sense by the time we are done.

If you haven't yet completed the collection of Strengths, Weaknesses, Opportunities and Threats for you business, you will want to do this first. See my previous blog for some suggestions and guidance for assessing your current state.

Capturing the current state of your business is critical, but collecting your SWOT snapshot is really only the first step in planning your new strategies. The Gap Analysis is the tool I use to help identify where you should be spending your time over the next period (typically 12 months).

Organizations cannot address all their opportunities, threats or weaknesses simultaneously...we just cannot effectively focus on that many different areas. When we try to simultaneously address too many critical issues, we end creating too many strategies and actions items and we push hard on all of them. Unfortunately, it is like one of those circus guys spinning plates; we just run around keeping plates from falling instead of actually seeing how fast we can spin one or two.

First, make an effort to prioritize your threats. Which of these "out-of-your-control" circumstances have the most potential to disrupt your business? Which ones are most likely to actually occur? Listing threats such as, "the economy goes back into recession," might have a highly negative impact on your business, but the likelihood of this happening in the next 12 months seems rather small sitting here on Nov 15, 2014. It doesn't hurt to have some contingency plans in place, but I don't suspect this threat to loom large in 2015.

Next, prioritize your opportunities. Which have the most potential for success? Criteria you might consider are Time to Capitalize, and Return on Investment or Net Present Value estimates. You should also consider strategic fit (how well the opportunity fits within your organization's skills experience and mission), availability of resources, long-term sales growth, payback time, and ability to leverage your technical and marketing resources.

Now line up your strengths and weaknesses on the left side of a piece of paper or whiteboard and your opportunities and threats on the right side with enough space in the middle to make some assessments. The center is the gap area. The question you want to ask is how can you leverage your strengths and improve your weaknesses in order to capitalize on opportunities or counter threats. Draw connections between each strength and the opportunities or threats that this strength can help address. Do the same with weaknesses. Which weaknesses could prevent you from capitalizing on opportunities and countering threats? As an example, you might have an opportunity to pursue a new market if you can modify a product quickly. However, if you have identified that your product development process is slow, or that your technical resources are limited, these would be weaknesses you need to address in order to take advantage of the opportunity you have identified. In fact, being realistic, you might determine that you do not have the ability to pursue this opportunity. Performing the assessment of opportunities and threats in light of your current strengths and weaknesses will allow you to more clearly determine the areas where you will now want to build strategies.

These steps are designed to help you Fill the Gap between your external state and your internal state. Next we will talk about tools that can help you establish more effective strategies.  Whether you are a collaborator by nature or not, I would like recommend you not do this analysis and planning work in a vacuum. Your team needs to be part of the planning process if you expect to secure the buy-in needed to move your organization forward.  To that end, we have a terrific workshop on "Building Great Teams @Work" scheduled for December 5, 2014 at the Lansing Country Club in Lansing, Illinois. This is a great opportunity to sharpen skills designed to help you strengthen your teamwork. Use the code word: Today and receive 20% off this terrific workshop.

Feel free to contact me directly at jvonthaden@solutions-industrial.com or 630-403-8326 if I can answer any questions.

jvt

Planning - Assessing Your Current State

November is Planning Month at Industrial Solutions and we are blogging about steps you can take to make your planning as effective as possible. We are focusing on strategic and operational planning most of the week, but you might also be interested in reading some of the article links that can be found on the Industrial Solutions LinkedIn page as well. There is an interesting article there from Harvard Business Review warning readers that strategy is not planning. Instead, we use planning to build and implement a strategy.

Hopefully you have gathered information on your results as suggested in my last blog. Have you identified your current state in terms of comparing your progress to your goals. We suggested you look at year-over-year financial results, progress you have made in areas such as employee development or market penetration, and measurements around operational efficiency or product development.

There are a number of planning tools that can be very helpful in assessing your current state and guiding your thought process around strategy development and operational planning.  In my opinion, the SWOT Analysis (Strengths, Weaknesses, Opportunities, and Threats) is a critical tool for this process. While other tools such as Porter's Five Forces, PEST Analysis, BCG Matrix, and Life Cycle curves (Product Life Cycle, Consumer Adoption, Market Stage), have their advocates, I have found it most beneficial to integrate the thinking around these other tools into the SWOT analysis instead of attempting to have multiple tools each utilized in a stand-alone fashion.

The SWOT Analysis challenges you to honestly determine the strengths and weaknesses of your organization. You should begin by looking at areas where your organization is highly competent. Are there sustainable advantages you have over the competition? Do you perform amazingly and consistently well in specific functions? Do you have unique product features, intellectual property or unique processes? Are there investments you have made that are cost prohibitive for most competitors and therefore a roadblock for new entries in the market? Do you have a commanding marketshare or favorable position in a specific segment of the market? These are all areas to consider.

Now consider your weaknesses. Essentially consider where your organization is less than superior in areas of operations, finance, sales, products, distribution, capabilities, skills, knowledge, management, marketing, service, communication, structure, culture, attitudes, viewpoints, or location. Any of these could be areas of weakness. Remember, you are listing items that are within your control - even if you don't know how to fix them or believe it will take a very long time. Consider your organization in light of the market, economy, competition, suppliers, buyers, 

Next you will consider your external threats and opportunities. These are circumstances typically outside your control but which may have an impact on your business.  

Threats and Opportunities come from circumstances or changes within the market. Porter's 5 Forces suggest areas such as competition, suppliers or buyers. In addition, the PEST Analysis tool suggests considering how changes in economics, technology, society, and the political/governmental environment can impact your business. Be sure not to 'discount' threats that seem far-fetched or those with a long horizon. There very well might be reason to consider doing something now to stave off these threats. In addition, don't discount opportunities because you don't think you have the resources or ability to capitalize on them. This is NOT the time to limit your thinking or fail to consider all potential avenues. As an example from my own experience, a new technology was listed as an opportunity multiple years in a row before the organization decided to allocate any resources toward applying this technology to the business. If someone had decided to leave it off the list, then the organization might have missed an entire year of development.This handicapping of the SWOT data will happen AFTER you have completed collecting the info in as much detail as possible.

Next time we will talk about performing a GAP Analysis which is the real power for applying the information you have collected in your SWOT Analysis. If you would like more information about planning or think you could benefit from a third-party facilitator, feel free to contact me at Industrial Solutions.  jvonthaden@solutions-industrial.com or via phone at 630-403-8326.

Looking Forward - First Look Back

I had a number of positive comments regarding Motivation Month over the last few weeks.  If you enjoyed the posts, you will want to be sure to check out the Industrial Solutions LinkedIn page where we provided links to a number of articles and posts that really helped to round out and "fill the gaps" of my own writing.

This month we will focus on Planning and if you are in a mid-size or larger corporation, you have probably been in "planning" mode since sometime in August.  However, no matter when you started your formal planning activities, November seems to typically be the time when leaders get serious about looking ahead into the new year.  No matter what schedule you adhere to in your organization, or even if you don't have a formal process, this month I want to encourage you to do some forward thinking.

I will admit that often the pressure to finish the year on a positive note made thinking about the next year, or the next 3-5 years difficult. Shifting your thinking and engaging in some longer-term planning can be challenging to be sure.

My recommendation is to begin by reviewing your current state.  While looking backward isn't going to help you navigate, and no one drives while focusing solely on the rear view mirror, it is critical to know where you are in order to determine what it will take to get where you want to go.  I love using Goggle Maps on my iphone (sorry, Apple).  Google Maps just works for me. What I like the best is that I never have to indicate where I am currently located.  The app shows me where I am and the best route to get where I want to go.  I see how long it will take, what the route looks like and then I can track my progress spatially on the map, time-wise with the clock, and distance in miles or km.

Begin your planning by first looking at your metrics and asking yourself some questions. How are you doing this year?  Are you on track to meet your objectives? How does this year compare to last year?  Have you made positive progress? How do you know?  Where are the shortfalls in your goals?  Have you made corrections or adjustments this year, and if so, are they making a difference?

Did you just say that you don't have any metrics? Time to establish some. An organization needs to select a number of key measurables that are the most representative for taking the pulse of the organization.  For some the focus will be heavily weighted toward financial results, but be careful here.  The financials are not all that matter in an organization.  You might want to look at efficiency or utilization or new product release schedules.  You might consider employee development or market penetration.  Perhaps your goals included adding new customers or entering new markets. How are you measuring your progress?

I have always found that a current state assessment is of huge benefit when planning for the future.  It tells me how much further to my goals, what progress I have made so far, and what course corrections are necessary to continue my forward progress. In addition, establishing these metrics will be critical to how we manage in the future, so go ahead, pick those metrics, those critical factors and let's get a snapshot of where we are today.

One final thought: I believe this current state - future state thinking has implications for your personal financial goals, your family, marriage, and career development.  Determining where you are today is the first step to envisioning and implementing a plan to get you where you want to be in the future.

Take some time this week to begin collecting this data and we'll talk next about other ways to assess your current state.

Happy Planning!

After Labor Day - A Race to the Finish

Labor Day always strikes me like the bell going off as the runners reach the last lap on their way to the finish line. Two-thirds of the year are over. One-Third remains. Time enough to make real progress, but focus is the key to getting the most out of these last four months of the year.
So, what should you do? Here are four (4) suggestions to help you get the most out of your effort before the year has slipped away:

1) Invest in new promotional efforts. Your customers are facing the same year-end assessment and now is the time to remind them of the value of your products and services. An intentional sales and marketing push at this point could generate year-end business and set your organization up for a profitable New Year. Generate a list of existing customers who could be buying more from you. Can you put together a trial program for them? Perhaps it is time to follow up on customers who have taken their business elsewhere. Are they satisfied with their new supplier? Can you entice them back with an added value program? In addition, many companies are looking at spending year-end money or have begun their budgeting process for next year. The time to get in front of these customers is now!

2) Investigate New Technology. While technology won't fix a broken process, often the evaluation and subsequent implementation of new technology can be a catalyst to refining and repairing processes. These efforts will pay dividends long into the future and now is the time to begin looking at how you can improve your organization's effectiveness and productivity. What processes need better aligned? What 80/20 activities should be part of your going-forward strategy? Can you implement technology to deliver a better product or service for your customers?

3) Work on your Team Culture. Is your team firing on all cylinders? Do individual objectives align with the organization? Is there conflict? How well is your team communicating? Collaborating? Sharing? At the end of the day, the individuals in your team are responsible for the culture of your organization. Does your team execute well? Do they plan well? Do they communicate well? So they support one another? At Industrial Solutions, we are spending the next few months helping business leaders and organizations focus on Building Better Teams @ Work. This exercise could be a critical factor for your future.

4) Embrace the Strategic Planning Process. If you aren't already working on your next strategic plan, you should be. Now is the time to get serious about looking at your future. Have you completed your internal and external analysis/assessment? Establishing key objectives for the next phase of your business is critical to your success. Identify the critical factors that impact your business. Assess the 5 key drivers that contribute to Healthy Organizations. Many business owners tend to have a general idea about what they want to accomplish, but haven’t take the time to write-it-down, set goals, or share these goals with others. You should do all three!! There is great power in writing down your goals and verbally sharing these with your team, your partners, your family.

My Suggestion: Pick at least one of these to work on and follow through. On December 31st when you look back on the year, the steps you take now could be the most powerful ones you take this year. Make the most of your time!

Habits that can change your life

One of the most impactful books that I have read is Stephen Covey's The 7 Habits of Highly Effective People.  While I believe that all 7 habits can have a significant and positive influence on your success, there are two which I would like to discuss today.  The first two of Covey's seven habits are so powerful that if you can begin to live by them, I am convinced they can change your entire life.
1. Be Proactive.  You are more than the sum of your experiences.  You are more than the sum of your genetic code.  The argument isn't between Nature and Nurture.  It may be hard to believe, but you have the power to choose how you respond to every situation.  In fact, you are the only one who can decide how much value to place on others' opinions, even those closest to you.  We've all experienced it.  Someone we dislike, or who is unimportant to us has something negative to say about us. Their opinion about us matters little.  However, when someone we respect or someone close to us has the same opinion, we are devastated.  You may not believe it, you may not want to believe it, but you alone place value on the opinions of those around you.  Being proactive means saying, "I can, I choose, I will."  It means saying, "Let's look at our options."
2) The second habit is Begin with the End in Mind.  If you don't shoot at a target, you'll never hit your mark.  It is easy to just let life happen.  We look up and the year is almost over. we blink and our kids are nearly grown.  It is easy to get distracted.  Remember the sirens from Homer's Odyssey (check out O brother, Where Art Thou? for a spin on this classic) - they entice and draw us away from our purpose.  Beginning with the end in mind is a way to stay focused on the future.  Whether you want to set a target for the year, or a mission for your life, it is a huge benefit to start your journey by first thinking about where you want to end up.  Not just material things, but things of lasting value.  What do you want people to say about you?  When your time on earth is over, what will be worth the investment?  Max Lucado's new book, Outlive your life is along a similar line.  Lucado asks us the same question.  What were we made for?  Lucado tells us that our purpose is to make a difference in the lives of those around us. 

Each of us has to determine what target we are aiming for and then pursue it with passion and wholehearted commitment.  Don't let life happen to you, be proactive.  Don't wander aimlessly, chart a course. 

My best to you,

jvt